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Theology and Economy

October 10, 2008

Religion & Ethics NewsWeekly has asked theologians, ethicists, and others to comment on the current financial crisis:

Wendell Berry

The first thing that becomes apparent in times like this is how imaginary the economy is. Not imaginary in the sense of fake, necessarily, but in the sense of the way economic realities depend on how reality is imagined. So much of the panic selling of stocks, for example, is based on perception of reality, which then becomes the reality. When billions of dollars of wealth can vanish overnight, it becomes apparent how imaginary wealth is.

All of this is another way of saying that economics and theology have a lot in common. Both deal with how larger reality is conceived. Capitalist economics sometimes tries to deny this by separating questions of “fact” from questions of “value.” We are told, for example, that a market is “free” as long as transactions are informed and voluntary. It does not matter what people value; the economist claims neutrality on that question. All that really matters is if a transaction is free in the above sense. Regulation is usually considered an interference with freedom.

But of course this negative definition of freedom as freedom from interference is a deeply value-laden, theological notion. It assumes a view of the human person as essentially an individual, and it views the human will as sovereign and uncorrupted. Both of these ideas conflict with Christian theological notions of the human as essentially interrelated and in need of the healing of the will by God’s grace. For the Christian, true freedom is not just a lack of interference but is defined positively as an ability to flourish by being connected to God and to our fellow humans who are made in God’s image.

So the questions being raised now about regulation and deregulation and “interference” with the freedom of the market are theological questions, and the theological answer, I think, is that there is no such thing as a value-neutral “free” market. The question is always: “What kinds of economic arrangements lead to true human flourishing and freedom?”
Wendell Berry

We usually turn to the state to regulate the market when crises hit, but I don’t think the modern bureaucratic state is capable of giving real answers about true human flourishing. The best the state can do, as we’ve seen, is try to protect large financial interests. The state has been systematically undermining the interests of workers for a long time now, while politicians, especially on the right, distract the working class by emotional appeals to anti-immigrant sentiment and issues like gun ownership and reverence for the flag.

We have to begin, therefore, to create economic spaces that are not based on profitability and freedom from interference for those in power. There is just no way to avoid the deep theological questions about what makes humans really flourish. The churches should be cooperating with others to imagine and create economic spaces where true human flourishing can take place. The fair trade movement and providing markets for local farmers are a couple of examples. These create personal contact among people, where economic transactions take place within a community of people who are not simply trying to maximize self-interest, but are concerned for the flourishing of all parties involved. One of the lessons of the global economic meltdown, it seems to me, is that a stable economy is always essentially local, as the American writer and farmer Wendell Berry has been saying for years.

The Eucharist provides a resource for Christian imagination and practice here, because it connects people throughout the world but is always essentially local, a people sharing heavenly food around a table. The Eucharist is a kind of consumption whereby we are consumed by a larger body, the Body of Christ, in which, as Paul says, when one suffers, all suffer together, and when one rejoices, all rejoice together.

–William T. Cavanaugh is associate professor of theology at the University of St. Thomas in Saint Paul, Minnesota, and the author, most recently, of BEING CONSUMED: ECONOMICS AND CHRISTIAN DESIRE.

The recent economic debacle should cause us to reread, or perhaps read for the first time, the Christian theological tradition and how it inextricably relates economic exchange to morality (our quest for the good) and to God.

Alfred Marshall

British economist Alfred Marshall, well known for his Marshallian scissors of supply and demand, once said that the modern science of economics “puts man in the saddle.” In other words, all that now defines economic exchange is what humans decide. “Man” takes the place of God in driving history. Perhaps the wild speculation in the stock market that has come to a ruinous end for many (recall that some economists were predicting the Dow would reach 36000 by 2005 — do they still have their jobs? — and the impending fluctuations, where some would try to outguess the market and receive windfall profits, only accentuating the fluctuations) might cause us to reconsider Marshall’s wisdom.

What would it mean to think of economics in terms of God and the good? It would mean in part, I think, that we would take more seriously the problem of usury, which is often mischaracterized. Usury occurs when anyone thinks he or she can have an unlimited growth of money without it being related to validly productive enterprises. It is a sin against God’s created order. The vice of usury is greed, wanting a maximization of profit without relating it to any fruitful created product. Profit is permissible, but within a context of production that is good and can be rightly ordered to God. Once we have a system where an enterprise such as a corporation can be productive, that is to say, its workers produce quality products that serve the common good and better the lives of their neighbors and even turn a modest profit, and yet the first obligation of the CEO of that corporation is not to those workers or those neighbors but to the maximization of shareholders’ profit, then we have an improper disjunction between work, productivity, and money.

Diligence, loyalty, and work are no longer rewarded. What gets rewarded is speculation. We lose any relationship between what is produced and how it is rewarded.

We have seen this in the stock market, where there is little to no correlation between a corporation’s stock price and its earnings. I am no economist, but this seems to me inevitably to produce something of a Ponzi scheme that eventually comes back to haunt us. The individuals who benefit from this are not those who do the work, but those who speculate. They do not purchase goods. They purchase “time” — a speculative possibility of what might be in the future — and try to “sell” it to others, knowing that not all can benefit. The bubble will eventually burst.

As long as business, finance, and the “art” of management fundamentally serve only this one principle of economy, maximization of profit, we may very well continue to have such wild fluctuations every one or two generations, as we now seem to be experiencing. The result will be, as it currently is, that we will socialize the losses while we continue to capitalize the gains. Everyone becomes responsible to pay out when the Ponzi scheme fails. Only those who got in and out early reap the profits. The winners benefit at the expense of their neighbors’ good.

I don’t claim to know how to fix this, but I do think we have to rethink the role of the corporation, its managers, and its commitment to locality: to workers, neighborhoods, schools. Perhaps churches, synagogues and mosques could at least begin there, reminding people of God’s intentions for a profit related to the goodness of creation’s fruitfulness. They all share a fundamental assumption that unlimited growth for its own sake is usurious and that God gives us the opportunity for economic exchange in order to “sanctify” or “make holy” God’s name throughout creation.

What we have seen among CEOs as well as individual households is certainly unholy. It should at least be named for what it is. Greed, we have discovered, is not good.

–Steve Long is professor of systematic theology at Marquette University and the author of many books, including DIVINE ECONOMY: THEOLOGY AND THE MARKET.

The Seven Virtues

Ethics in the economy depends on character, not calculation. It depends on being a good person, not on “stakeholders” or other utilitarian considerations. The word “ethics” comes from the Greek word for “character,” and such an approach through what humans could aspire to be dominated Western — and for that matter Eastern — thinking for millennia. The old and honored approach is called “virtue ethics”: Be thou just, loving, prudent, courageous, temperate, hopeful, and faithful, said the ancients, and you will not make loans to people who cannot possibly pay or request bridges to nowhere from people who can. We are called by God to be virtuous — that’s the religious way to put it. But you can, instead, name the seven virtues the Seven Secular Commandments and note that an economy cannot get along without a modicum of all seven.

–Deirdre N. McCloskey is UIC Distinguished Professor of Economics, History, English, and Communication at the University of Illinois at Chicago and the author of THE BOURGEOIS VIRTUES: ETHICS FOR AN AGE OF COMMERCE.